Why my first startup in the valley “flopped”

http://pozo.me/post/28603867718/startup-flop

by pat2man • 14 years ago

35 25 14 years ago

dglassan3• 14 years ago

It flopped because you didn't make it into an incubator? C'mon.

I don't know what product you built but it sounds like it flopped because no one needs a better way to gather their friends. That doesn't sound like a problem (or a business) to me.

emmanuel_p3• 14 years ago

That was one of the factors that contributed to the "flop". And your point was addressed in my first issue. "Identifying a problem vs fabricating one".

heretohelp• 14 years ago

>We should have identified that our service was not adding much value and moved on. We should have done this 6 months in and not waited a year to cut our loses.

Coulda figured that out a priori, which is partly why VCs have economic value. They have their limitations, but they're not quite so hypo-maniacally deluded as most valleyite entrepreneurs.

dglassan3• 14 years ago

There are tons (maybe more?) companies that are successful without the help of an incubator. People have been raising money and building successful companies decades before the idea of an incubator even came about.

Not making it into an incubator didn't contribute to the flop at all. A bad company going through an incubator is still a bad company. I'm not saying your company was bad, I'm just trying to explain that this whole idea that a startup can only be successful if they go through an incubator is completely bogus.

georgemcbay• 14 years ago

This is a bit of a chicken and an egg thing though. Startup failed because it didn't make it into an incubator or startup didn't make it into an incubator because startup was destined to fail?

From the blog post: "If we had gone through several products, and applied multiple times our chances of getting in would have been higher and who knows if I’d be writing this blog post today."

Are you sure it works that way? Having never applied for YC, I have no idea if it does or it doesn't, but from what I've read here on HN it seems like the product idea is very secondary to whether or not the YC team believes in the founders as individuals and pitching them again with a new product idea in a subsequent YC round wouldn't have really helped if the product is all that has changed.

Which is not to say that failing to get into YC once means you'll never get in but rather getting in in the future won't be due to new product ideas, but rather demonstrable growth as an individual (or team) which is probably actually harder to accomplish in a year-long timeframe if you're constantly focusing on which new product idea you should try.

In any case, I'd say your startup failed for the primary reason any startup fails, which is that failure is the natural state of any startup. Successes are the very rare exception.

ChuckMcM4• 14 years ago

I've seen a lot of startups come and go and there is a huge difference between 'coming up with a problem to solve' and 'finding a problem to solve.'

They sound the same but they aren't. In the first case you look around and you say "What problems are people having?" and you see one and you thing "Oh, I could solve that, let's go!"

The challenge is that if you asked them they might agree its a problem but might not think it is worth solving. If instead you talked to a bunch of people and said, "I'm here to solve your biggest problem, tell me about it so that I can get started." you get from your future users what they think is the biggest problem that needs solving.

Now if you talk to a lot of people you will get a set of problems. If you make sure you talk to people of different ages then you'll populate your set with problems from different age groups (and different life stages), if you talk to people in different industries you will populate your set of problems with with different skill sets, and if you talk to people at different sized companies you will populate your problem set with people with varying levels of time/money to invest or spend.

Now if you take those problems, and try to tease out what the underlying structural issue is that makes it a problem you will get a list of structural issues.

Finally, after all this talk talk talk, you find the structural issues which are at root of many problems, and then design a product around that.

Your will have a huge advantage. You'll know why you built your product, you will know the kinds of problems it can make go away and how much of the problem it will mitigate. You can quantify the impact on your customer's quality of life, and you can target people who you can reasonably expect are having the problem you can solve.

In many ways understanding how your vision fits in to the rest of the world will be the 'secret sauce' that makes you successful.

emmanuel_p3• 14 years ago

Great insight.

seunosewa• 14 years ago

This sounds very good, but many sensible ideas don't work in practice. Any practical experience to back it up?

ChuckMcM4• 14 years ago

Well this the way we went about developing our product at FreeGate which was widely praised by our customers and lead to a successful exit (acquisition ) in 2000. However through out my career so far I have had more success when problems come to me rather than making ones to solve.

zeeed• 14 years ago

but hey, you had a start-up in the valley. congrats on learning from your mistakes and committing to making it better, next time. Good luck finding your path!

bitanarch• 14 years ago

My last startup flopped as well. But honestly I couldn't be happier - I think a lot of first time entrepreneurs make similar mistakes. But you wouldn't be able to learn them by heart until you've made them and seen what'd happen after each and every thing you did. Learning by screwing up is 1000x better than learning by reading Hacker News or Venture Beat.

joshu2• 14 years ago

i wish people would stop distilling their experiences into pithy blog posts. the experience is the valuable bit; if you just supply the lessons learned, no lessons are actually learned.

rachelbythebay• 14 years ago

Speaking as someone who learned a lot from Usenet back in the day, I'm going to have to disagree with you. Remembering nuggets of data from old posts has made me able to pull off feats of magic at times when I shouldn't have known anything about a system in question (because I had never touched one before). Even just knowing where to look can give you a head start.

Now, if I never remembered this stuff, okay, it would have been time wasted. If that's the case for you and you don't take away anything from blog posts (the closest thing we have to rich Usenet posts any more), then perhaps you could try not reading them.

joshu2• 14 years ago

Did the nuggets concern software or people?

I think useful advice about the latter is far more rare about the other kind.

johnrob• 14 years ago

The paragraph titled 'Identifying a problem vs fabricating one' is a rewording of the most important lesson: make something people want. The problem is, we all know this one and have read hundreds of version of it.

Experience is the valuable part because, after hitting the wall, you look back at the same advice and realize how much of it you ignored.

The lessons are valuable; they just fall on deaf ears for most of us.

klawed• 14 years ago

>Changing consumer behavior

Kevin Maney, in Trade-Off, posits that something needs to be 10x cheaper (or better, or faster or...) to compel someone to change a behavior. Ray Ozzie liked to apply this rule during his tenure at MS as well. Obviously, measure 10x cheaper is much easier than measuring 10x better but the point remains that if you're asking people to change their behaviors in any meaningful fashion, you need to give them real incentives. Edit: adding line break for clarity.

robomartin• 14 years ago

It's tough, particularly if it's your first time out. Thankfully the cost of trying out ideas in the software world is very low. Try experimenting with hardware to see the other extreme.

In many ways doing hardware ventures teaches you something very important: Ideas are not what's important; Opportunities are important. This, because the cost of failure can be very high, and so you learn very quickly that the idea is almost of no real value until a matching opportunity is identified.

Everyone has ideas for a million different gizmos. I certainly get approached on a regular basis with "let's build this thing that does this and that and that". When I ask about the opportunity I usually get blank stares. People think in terms of ideas. Business is about opportunities that are then matched with solutions and execution in order to turn a profit.

I used to be on the "I have this great idea" camp. After a number of businesses all I really care about are solid opportunities. Ideas are nearly worthless on their own.

kkowalczyk• 14 years ago

"We took a small friends and family round"

That I do not understand. Why are people so desperate for funding, any funding?

An ex-Zynga engineer should be easily able to save enough money for at least 6 months, while he's working on an mvp.

Pre-emptive note: I do understand the value of idea validation, expert advice and connections that comes from getting a small investment from YC or a well-connected angel investor like Kevin Rose.

But "friends and family"? It seems bad for both parties.

If successful, the founders will loose a significant portion of the business for insignificant help (small amount of money but no expert advice and no network to help them in the future).

But most likely they'll fail which doesn't seem fair to their friends and family.

Incubators like YC and angel investors are sophisticated. They only invest money they can afford to loose, they understand that any single investment has 10% chance of succeeding so they hedge their bets and they also have a much better understanding of what has a potential to be successful enough to offer enough ROI for the investor.

Compared to that, an average person is naive and over-confident about investing, just like the author of the article was ("I quickly learned that unless your product has mass appeal and traction, or you are Kevin Rose, high profile Angels are not going to throw money at you.").

Both parties are victims of confirmation bias: reading TechCrunch one reads mostly about successful investments and exits which makes inspiring entrepreneurs think that an investment is normal and inevitable (reality: it's extremely rare and only awarded to those who stand out from the crowd) and makes naive "friends and family" investors think that making 10x ROI is a sure ticket to riches (reality: only the top investors make significant returns).

Why my first startup in the valley “flopped”

Related Stories